Listed company NZF Group says it is in discussions with its trustee about converting its debt to shares, after saying it will not generate enough cash to pay its noteholders when they mature in 2016.
The company, which is being investigated by the Serious Fraud Office for alleged related party loans, says its liabilities exceed its assets by about $4 million.
It says it has enough cash to pay interest on the notes over the next 18 months, if it makes no new investments.
NZF says it is holding talks with its trustee, Perpetual, about converting the notes to equity, and putting a proposal to investors.
If there is not enough cash to redeem the notes, NZF says they convert into equity.